Blockchain is a technology that has been gaining steam recently, and with the growth of cryptocurrencies such as Bitcoin, countries like China move to cashless points of sale, using a blockchain to replace paper cash for digital cash. Satoshi Nakamoto, the brains behind Bitcoin, used the blockchain concept as a response to the 2008 economic crisis. Fundamentally, blockchain involves the removal of transferring copies of information through a decentralized trust protocol. It empowers peer-to-peer transactions to take place, eliminating the “middle man”.
Imagine blockchain in the context of train cars. Each car is a block that is linked to a growing number of other blocks, all encrypted in the global network. Each block is a unique part of that blockchain. Every transaction is recorded and time stamped, should information be passed on from one block to another (from one car to another) with a traceable chain. Some would describe blockchains as a database, storing these time-stamped records and assets. However, unlike a database, blockchains do not have a central authority— they are decentralized by design.
Currently, cash, credit card, and electronic (contactless and online) payments are the most widely used and accepted in businesses around the world. All of these forms of payment are centrally controlled and facilitated by a “middle man”, or a bank. In the case of cryptocurrencies, money is the asset that is transferred between parties using blockchains. Without the use of a “middle man”, the transfer is made from one person to another person, through their digital wallet.
This concept can be applied to any other form of digital asset, including legal documents, music, movies, car parts, and more. The transfer of these assets can happen using blockchain– reducing inefficiencies and costs.
In manufacturing and logistics, blockchains are being explored as a tool to facilitate logistics and daily transactions that occur in this industry. One such example is Walmart— who is using blockchain records to track the import of meat from China into the United States. They are using blockchains as a tool to help delineate and manage their various supply chains. Blockchain technology can help deliver security to vulnerable supply chains, which currently take a “break and fix” approach to their services. Blockchains can help provide a layer of visibility and transparency to the processes that are used at supply chains. Supply chains can see precisely when and where parts are moving throughout the facilities to ensure that manufacturing equipment can run properly and if issues arise, can be repaired properly and promptly. Supply chains can use blockchains to share this information throughout their organization; they are able to create and maintain shared and continuously updated database across their facilities.
Blockchain technology has been seen in manufacturing applications ranging all the way from food production to auto production. Manufacturers are eager to use blockchain technology to help mitigate risks in supply chains, so that products are built on time and the world of commerce runs efficiently.
It is clear that the applications of blockchain technology extend far beyond cryptocurrencies like Bitcoin, creating a promising future for the technology. Adopting blockchain technology in industry certainly takes a great deal of investment, and a strategic rethinking of a company’s digital operations. Blockchain technology is certainly not suited for every business, yet for where it is suited, its applications are limitless. The investment required to use blockchain technology in businesses can certainly translate into a significant return on that investment. These returns can come in many forms, but most importantly, in the face of increased security and encryption, and the mitigation of risks and issues with logistics in the physical world.
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